FEMA will issue flood insurance policies despite shutdown

President Donald Trump’s administration on Friday reversed new guidance issued by the Department of Homeland Security that prevented the Federal Emergency Management Agency from writing or renewing National Flood Insurance Program policies during the current government shutdown.

FEMA announced the change of policy in a statementFriday, much to the relief of homeowners, as well as members of Louisiana’s congressional delegation who had played a key role in getting NFIP coverage extended into 2019.

In a statement, U.S. Sen. Bill Cassidy said FEMA had erred when it told insurers earlier this week that it said it cannot issue or renew NFIP policies during a partial government shutdown.

The decision had caused numerous home sales to be delayed because buyers weren’t able to obtain flood coverage.

“FEMA’s initial guidance made no sense, and I’m happy to announce they are heeding my direction and will start selling new flood insurance policies again,” Cassidy said. “It’s unfortunate so many people were inconvenienced due to FEMA’s error, but I’m glad they are correcting it so home sales in limbo can proceed.”

FEMA had previously said it decided to halt flood insurance funding because commission payments to the private companies that issue the policies could be seen as an “impermissible funding obligation” during the shutdown.

More than 500,000 Louisiana homeowners currently depend on the NFIP for flood protection and roughly 40,000 of those policies are up for renewal each month, The Advocate reported .

Home sales in parts of New Orleans and other areas had been on hold in instances where required flood insurance can only be obtained through the federal government, NOLA.com/The Times-Picayune reported Thursday.

Kelli Walker Starrett, senior vice president for the New Orleans Metropolitan Association of Realtors, said members saw an impact from FEMA’s policy, prior to Friday’s reversal. The group sent out a notice Thursday morning to local real estate agents, informing them that NFIP policies could not be issued during the shutdown. Within a few hours, Starrett said she got word that as many as 25 local home sales had been delayed because buyers could not obtain flood coverage.

A long-term solution to keeping the NFIP afloat has proven elusive since 2005, when three major storms — including Hurricane Katrina — led to unprecedented claims.

Critics consider the program unsustainable in its current form and have pushed to increase premiums and eliminate coverage for properties filing repetitive claims. NFIP backers argue it provides the only safety net available for coastal and flood-prone areas and is essential to sustain such communities that are economically significant.

Last week, members of the Louisiana delegation were key in getting NFIP coverage extended through May 31. The compromise was reached as lawmakers attempted to hash out a budget bill that met President Donald Trump’s approval before a Dec. 21 deadline for a partial government shutdown.

Gov. John Bel Edwards applauded FEMA’s new policy Friday.

“This is welcome news for the thousands of homeowners in Louisiana who depend on the National Flood Insurance Program,” he tweeted. “Thank you.”